Note: This is the council’s last regularly scheduled meeting before it takes its summer recess. The council will reconvene on Aug. 27.

Hamstrung by shrinking federal subsidies for affordable housing while still grappling with a short supply of homes for residents most in need, city community development staff members have finalized a handful of changes to a local ordinance that they hope will help Davis meet its affordable housing demands and maximize staff resources at the same time.

The recommended revisions that the City Council will consider Tuesday include:

* A primary focus on affordable rental housing: Staff first will ask that the council focus “all, if not almost all” of its affordable housing resources on building up the affordable rental housing supply, rather than ownership housing.

While the city traditionally has built rental units when subsidizing affordable housing, according to Katherine Hess, community development administrator, developer-funded projects often largely feature ownership units.

If approved Tuesday, this policy would strengthen the city’s emphasis on affordable rental housing — specifically to assist the very low-income population in the community — while encouraging developers to build affordable rental units, as priority would be given to developments with rental offerings.

“Affordable housing for households at the upper-end of the low-income range … is provided in rental opportunities throughout Davis,” Hess and city staff said in their report to the council. “Moderate-income households have the choice of rental housing in Davis, or ownership homes within easy commuting distance. (But) very low-income households are not served by market-rent housing in Davis.”

Households classified as very low-income earn up to $26,950 for a one-person household and up to $38,450 for a four-person household in Yolo County.

* Lowering the bar for the inclusionary requirement: In the past, 25 percent of homes built for any housing project in Davis were required to be affordable, no matter the size or the type of the development.

Staff believes that by restructuring that inclusionary requirement based on a graduated scale — where fewer affordable units would be required for certain types of smaller projects — the city could encourage more infill and compact development. Hess says the change also would diversify the type of housing the city can offer to lower-income households.

If approved Tuesday, the affordable housing requirement for single-family detached, or standalone, homes would be lowered to 15 percent. Single-family attached units, such as town homes, would only need to be 10 percent affordable and stacked condominiums would require no affordable housing at all. The requirement for large lot, single-family detached units with more than 5,000 square feet would remain at 25 percent.

“This structure would provide an incentive for builders to construct housing types that are more difficult to entitle and construct, and riskier to finance and market, which can further city goals for infill, densification, a mix of housing types and increased affordability,” staff said in its report.

* Affordable housing in-lieu fees to bolster revenues: To recoup some of the losses sustained when the city’s redevelopment agency was dissolved — among the dwindling of other outside funding — staff is looking to developers for some financial help.

Staff will propose Tuesday to begin charging an in-lieu fee — possibly of about $50,000 to $55,000 per development — that would allow developers to forego the inclusion of affordable housing in a project.

According to staff, based on the projects they expect to get the green light in the next five to eight years, they estimate that the city would receive approximately $1 million from the fees.

“… It doesn’t come close to what we lost when the agency was dissolved, but it might be enough to leverage tax credits for a project,” Hess said in an email.

However, several groups have raised strong concerns over allowing in-lieu fees, including the city’s Social Services Commission and Legal Services of Northern California, representatives of which say that in-lieu fees should be allowed only for smaller projects, if at all.

If approved, the funding generated would be directly tied to acquisition, rehabilitation or construction of residential buildings only. The city also would determine whether to accept the fees on a project by project basis.

* Granny flats to contribute to inclusionary requirement? Staff also will recommend that any accessory dwelling unit — commonly known as a granny flat, which is a smaller, often one- or two-bedroom unit built on the same plot as another home — count as a half-credit toward the city’s affordable housing inclusionary requirements, even if the unit isn’t considered affordable.

“These units can create a range of housing options, provide income potential for homeowners and increase vibrancy of a neighborhood,” staff said in the report. “Accessory dwelling units can also help meet a community’s fair-share obligations under Housing Element law.”

However, the city’s Social Services Commission voted 5-2 against this provision, because it did not guarantee that units would be rented at an affordable rate or rented to low-income households, according to Hess.

The city conducted a survey of the 131 properties in Davis that have been permitted to build granny flats. Of the 50 or so responses staff received, 23 units were rented at low-income levels with a few of those being very low-income.

“Staff is comfortable that accessory dwelling units, particularly those that meet the recommended performance standards, can provide a form of affordable housing that would not otherwise be provided by the market,” the report said.

— Reach Tom Sakash at [email protected] or 530-747-8057. Follow him on Twitter at @TomSakash

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Tom Sakash

Tom Sakash covers the city beat for The Davis Enterprise. Reach him at [email protected], (530) 747-8057 or @TomSakash.